The repository of one hard-boiled egg from the south suburbs of Milwaukee, Wisconsin (and the occassional guest-blogger). The ramblings within may or may not offend, shock and awe you, but they are what I (or my guest-bloggers) think.

Mortgages that have been modified are redefaulting at an alarming rate

It doesn’t look like there’s any good news in these modified loans:

"One very troubling point is that, whether measured using 30-day or 60-day delinquencies, re-default rates increased each month and showed no signs of leveling off after six months and even eight months," said Comptroller of the Currency John C. Dugan.

The understatement of the article is:

"This trend of increasing delinquencies underscores the need to understand why these modifications have not been more sustainable."

Aside from all of the obvious factors like:

Over leveraged to start.

Poor household budget management skills.

Ongoing home value decreases causing owners to be upside down in equity 60 days after they have their debt reset.

there is one reason that may rise above all others:

We’ve become a bail out nation.

The bail out mentality is part of the reason why markets haven’t settled, banks haven’t started lending and economic activity is continuing to shrink. With the Federal government running around sprinkling their bail out pixie dust with logic known only to themselves, investors don’t know what basis to make investment decisions on, banks don’t know whether their loan terms will be honored.

Oh, and don’t think just because you’ve been bailed out once that you need to be accountable going forward. AIG, numerous banks and the auto industry has or will be coming back for bailout of their bailout.

So if you’re a house squater (you really can’t be a home owner if you have no priority for your asset) that has been bailed out once, and you’re watching what is happening in the broader world of finance, what conclusion should you draw? If your new payments are still inconvenient or you’re upside down on your equity, again, why would you not expect your lending institution to acquiesce a second time? After all, the lender has likely received TARP or other Federal funding by now. It also likely has a new “non voting” shareholder who is doing it’s best to “encourage” that lending institution to “be a good citizen” with its recent “help.”

To me, the Federal government’s continual willingness to bail out anything with a sob story is conveying to folks that money does grow on trees. And let’s face it, if any of us really did see money growing on trees, which of us wouldn’t go over to reap the harvest?

December 30, 2008

I spent all day trying to eradicate a rather new trojan from the Soviet Union that drops a piece-of-shit malware program called Antivirus 360 off the younger sister’s and her husband’s computer, without complete success. Without going into the long, sordid details, I tried both manual removal suggested by various websites I semi-trust and a McAfee scan with the current definition, one that supposedly eradicates the fucking problem, both with very-limited success.

The “good” news – I did get rid of the end result (the Antivirus 360 install), and McAfee did (allegedly, at least) get rid of the initial downloader. Also, as long as IE isn’t opened, the computer is more-or-less stable.

The bad news – The intermediate program is still hooked into IE like a black lab pup on her favorite chew toy.

Round 2 is scheduled for tomorrow, and I’m bringing in some bigger artillery if the overnight “safe mode” scan doesn’t do the job. That may well mean no Scramble or any other posts (I sure as hell don’t want to log into anything on an infected system).

Crystal Clear Conservative is shocked, SHOCKED that the Federal Reserve is tripling its space. Well, when it is the primary instrument in the accelerated socialization of the economy, it’s no surprise that it will demand more space.

Dean has one more (un)intended consequence of the coming transition to digital TV; a forced change in the wireless microphone frequencies.

Glenn Reynolds wonders how a Texas legislator who never made more than $7,200 annually as part of the part-time Texas Legislator is walking out the dorr with a $92,704 annual pension. Can you say, “Party of Government?”

Jim Hoft found a brave, smart Palestinian girl who didn’t listen to the brainwashing. Hamas will almost certainly be sending her to join the rest of her family inside of 4 weeks for the “unforgivable crime” of blaming them for starting what Israel is desperately trying to finish before they lose the one friend they have on the UNSecurity Council (and yes, the lack of a space is intentional).

Jib offers some money-saving ways to welcome in 2009. Of course, the #1 advice won’t work in Milwaukee (audio courtesy Patrick) – “Fire a gun in the air at midnight. At least in prison, you’ll get three squares a day.”

With just a few days left in the year, this is the time when numerous publications put out “Top 10” lists of events and other notoriety from the year that is about to finish. In this article from the UK Telegraph, Oxford University puts out its top 10 most irritating phrases for the year. “At the end of the day,” “24/7” and “it’s not rocket science” are three of their most offensive phrases.

I’m not very good at year end top 10 lists. I find that my memory doesn’t retain enough items to make a successful list. In fact, most times when I see a top 10 list I’ll read it and go “oh yeah, I’d forgotten about those 3 or 4 items.” Yet, I still feel the need to participate in these year end remembrances so I’ve found a way to use my limited memory to best use; I’ll create a list for the year that is coming up.

So, without further ado, my sole entry for most hated phrase of 2009 is:

Shovel Ready

“Shovel Ready” is not a new term, it’s been around for a while. It has typically been used in property development and meant a piece of real estate that had been through all of the proper approvals, planning and zoning and was ready to begin construction immediately. In 2009 “Shovel Ready” will be certainly used to describe a project for which a quick start could be had but it will also be used in other ways.

President elect Obama continues to ponder the mother of all stimulus bills. He’s asked Governors, Congress persons and others to submit lists of “Shovel Ready” projects that are being held up due to a lack of funding. The theory is that by having the Federal government spend money on projects it will stimulate employment and get infrastructure built that would otherwise sit on the drawing board.

Unfortunately, with the only criteria for submission being “shovel ready,” we’re already seeing that “shovel ready” does not equate “needed,” “cost effective,” or “smart.” According to the Star and Tribune, included in “shovel ready” projects are:

$4.8 million for a polar bear exhibit in Rhode Island and $1.5 million for a water slide in Florida.

And, in the district of King porker himself, Minnesota Democrat Jim Oberstar, chairman of the House Transportation and Infrastructure Committee, we see the requests for the following:

$2 million for a lake-walk extension at Beacon Point and $6 million for snowmaking and maintenance facilities at Spirit Mountain.

Can anyone explain to me how leaving these four projects, and I’m sure many more like them, on the drawing board would hurt our chances of economic recovery?

Each of Oxford list of irritating phrases was originally used within their true purpose. However, in time and through over use, the phrases became perverted to mean something other than their original intent. The same will happen to “Shovel Ready.” By the end of 2009, “Shovel Ready,” rather than a project that can quickly be initiated, will come to mean anything that couldn’t pass economic muster by well thinking people but got shoved down the public’s throat for the benefit of some minority constituency, anyway.

Come to think of it, “shovel ready” will likely have one other meaning in 2009. Anytime you hear that something is “shovel ready” you can easily assume that what will be shoveled near term isn’t any dirt, but a lot of manure as the person selling their project tries to get common sense pushed aside and political graft inserted.

December 29, 2008

My Congresscritter, Paul Ryan, realized the Federal Reserve is playing a very dangerous game with the money printing press. While he still hasn’t quite made the connection to the bailout-palooza he supported, those smarter than I predicted the dire consequences, including flooding the economy with money (which is, by its nature, inflationary) and the potential for “monetizing” the federal debt, back when the original bailout was only being talked about.

JSOnline’s DayWatch reports that the Wisconsin Campaign Finance Information System website, run by the Government “Accountability” Board, features Minneapolis’ skyline. Of note are some of the reactions:

– Tommy Winkler, an ethics specialist for the board, claims that the Connecticut-based designer was using Minneapolis’ skyline as a “placeholder” while it tries to find a copyright-free image of Madison’s skyline. What; the state doesn’t have any images of Madison or Milwaukee (or Eau Claire, or Green Bay, or Superior, or Wausau, or…you get the picture) available?
– Jonathan Becker, director of the board’s Ethics Division, wishes that was Madison’s skyline. Somehow I doubt the folks on the local Politburo of the People’s Republic of Madistan would allow a private building to rival the state Capitol in height.

While the Journal Sentinel chose to just grab the header image, I decided that the full-page screen cap is more appropriate (click for the full-size pic):

I’m a bit under the weather, so that’s why I’m late today. It’s been a while since I did an instrumental, so let’s start the week off with one…

[youtube]http://www.youtube.com/watch?v=U-zjnVmuTzs[/youtube]

Lemur King wonders if things are truly as bad as the press says it is. He notes that if one takes out the excess of the later Clinton/early Bush years, the S&P Retail Index is right back in the 30-year wheelhouse.

Mark Pribonic hacks apart the Transportation Stimulus Act. Question of the week from Mark – “If $3.1 trillion dollars of government spending cannot keep the economy from going into the tank, then why would anyone think that an additional $500 billion to $1 trillion would do any better?”

Shoebox asks whether we can afford the payments on the Obama Stimulus Package. Stat of the day – if the 3 million jobs Obama wants to create do go 80/20 private/public, the increase in the government rolls would be 3 times that of the private rolls.

Asian Badger offers a look into the bidding process that will become more widespread in the next Administration.

Sean M. cheers the scientific death of Gorebal “Warming”. I would too if we hadn’t lost the political war while we won the scientific battle.

Jib is disturbed that Iosif Vissarionovich Stalin came in third in a Sovie…er, Russian state television poll of historic Russ…er, Soviet historical figures. Ioseb Besarionis dze Jughashvili wasn’t even a Russian.

Steve S. found the Soviet Unio…er, Russia using natural gas as a weapon against Europe in an effort to neuter opposition to the restoration of the Soviet Empire.

Eddiebear is shocked, SHOCKED that following the whims of envirowhackos invariably makes for a worse environmental disaster, as Seattle doesn’t reap because it didn’t sow.

Glenn Reynolds reminds us that Obama once called for just the Israeli response to Hamas that’s being delivered now. If memory serves, that statement already passed its expiration date, the day after Obama made it.

Charles Johnson points out the “innocent” Gazans not only voted Hamas into power, but attended en masse a multitude of anti-Israeli demonstrations “glorifying” the rockets Hamas has been firing into Israel.

CDR Salamander reminds us of the savages we’re fighting in Afghanistan. I’m surprised the NYT and The News Organization That Cannot Be Quoted™ played this one straight.

John surmises this is because we beat the Islamists with the press release.

I do need to close this out with some holiday cheer – Bill Quick found a study that asserts that spiked eggnog is safe. Cheers!

In an Oped piece in the Washington Post yesterday, one of Barack Obama’s economic advisers, Lawrence Summers attempted to lay out the reasons for the next, still growing, stimulus package. The stimulus package was originally discussed to be in the $600 billion range. However, as Obama gets closer to his first attempt at sitting in the driver’s seat the numbers have continued to rise. Lately, the range discussed has been as high as $1 trillion.

Summers takes a typical liberal approach to spending lots of money that has no profit or benefit on the near term horizon; we’re investing in our future:

The Obama plan represents not new public works but, rather, investments that will work for the American public. Investments to build the classrooms, laboratories and libraries our children need to meet 21st-century educational challenges. Investments to help reduce U.S. dependence on foreign oil by spurring renewable energy initiatives (many of which are on hold because of the credit crunch). Investments to put millions of Americans back to work rebuilding our roads, bridges and public transit systems. Investments to modernize our health-care system, which is necessary to improve care in the short term and key to driving down costs across the board.

Funny, I seem to remember a lot of chatter from the portion of the “15th Century, here we come” Left that told us that drilling for oil on our shores wasn’t worth doing because it would take years before we would see the benefit. Now we have the left telling us that “investments” that will take years to pay off are the right thing to do….anyone else confused?

Along with “investing for the future,” Summers uses the “it’s all about jobs” argument for spending billions of dollars we don’t have:

A key pillar of the Obama plan is job creation. In the face of deteriorating economic forecasts, Obama has revised his goal upward, to 3 million. For one thing, significantly fewer positions would be created in the absence of any recovery plan. Second, more than 80 percent of these 3 million jobs will be in the private sector, including emerging sectors such as environmental technology. This is a bold goal. But economists across the political spectrum recognize that it is far less risky to stand firmly against the forces propelling our economy downward than to be timid in the face of a mounting crisis.

The creation of 3 million jobs is a new target. Obama’s original plan was a modest 2.5 million but as the economy has continued to soften Obama has stepped up his replacement plan. The extra jobs is part of the reason why the amount of stimulus has increased.

O’Neill did the math so you don’t have to. Each job "will cost $250,000, which doesn’t suggest much labor intensity for the dollars spent," he said. "It makes me wonder if any of the planners or commentators are good at arithmetic."

Well of course they’re not but that’s beside the point.

The real question in this is whether Obama’sstimulus plan can actually create 3 million jobs? If he can, how will he and what silver bullet of economic development does he know that mere mortals in economics don’t? The answer is found hidden, but accessible with a little work, smack in the middle of Summers’ oped:

A key pillar of the Obama plan is job creation. In the face of deteriorating economic forecasts, Obama has revised his goal upward, to 3 million. For one thing, significantly fewer positions would be created in the absence of any recovery plan. Second, more than 80 percent of these 3 million jobs will be in the private sector, including emerging sectors such as environmental technology. This is a bold goal. But economists across the political spectrum recognize that it is far less risky to stand firmly against the forces propelling our economy downward than to be timid in the face of a mounting crisis. (emphasis mine)

At first blush that statement doesn’t really seem like much; 80% in the private sector sounds good. However, that leaves 20% in the public/government sector. Again, doesn’t sound too bad, at first blush. According to the Bureau of Labor Statistics there are approximately 144 million people employed. Of that, just under 2 million are employed by the federal government. State and local governments employ another 8 Million for a total government employment of about 10 million.

If 3 million jobs get created and they break down 80% private and 20% public, that would mean that 2.4 million jobs are created for private enterprise and 600,000 are added to the government ranks. 2.4 million jobs on top of the 134 million private sector jobs means that Obama’s plan will increase the private sector by 1.8%. In contrast, adding 600,000 jobs to the existing 10 million government jobs means that Obama’s plan will grow the government sector by 6%, more than 3X what he plans to do for the private sector.

Just to keep the “it’s for the children” crowd happy, I’ll do the math assuming that Obama really means the 20% to include education. There are approximately 8 million public school employees. Taking those from the private and adding them to the public still leaves the private sector getting less than 60% of the growth that Obama has slated for the public sector.

Lest you think I’m one of those folks that thinks government employees are a complete waste of time, I’m not. Like cats, there are some useful purposes for them. Also like cats, good etiquette keeps me from describing on a public forum, what most of those useful purposes are.

Here’s the point, increasing employment by adding government employees is easy. How tough is it to hire a bunch of people to do nothing particularly useful beyond increasing the rolls of union paying members? The trick in this is how is Obama going to pay for those jobs long term? Adding jobs to government when you are about to inherit an $11 trillion debt and an annual deficit under the best circumstances that will be $500 billion, is the same as the folks who took out the 110% home equity loans but found that they couldn’t afford the payments when the interest rates went up.

It’s ironic that to justify this massive government spending, Summers is willing to discount and downplay near term benefits claiming that this is being done for our future. I wish he was just as concerned about the future implications of the debt and bureaucracy that will be created. Again, like the folks who bet on ever increasing home valuations and income streams, I wonder if we’ll be able to afford the payments?

You may recall, it’s had a bit of press coverage, that Barack Obama is taking his holiday on Oahu. You may also recall Obama’s claim during his acceptance speech:

…this was the moment when the rise of the oceans began to slow and our planet began to heal…

Apparently not.

If Jerry Falwell or Pat Robertson were commenting on this they might look to make a theological connection between Obama’s holiday opulence during a time of significant economic concern….but they’re not and I won’t.

I’ll just say that either Mother Earth hasn’t received her notice of Barack’s election or, evidently, being simply “elect” means you don’t have your full powers yet!

December 26, 2008

Kitt was best know for her songs. However, she had a pretty extensive acting career as well. I remember her as Catwoman but honestly thought the role she had that best exploited her unique voice was that of Yzma in “The Emperor’s New Grove.” OK, it’s not high theatre but if you haven’t seen it you need to, just to hear her use one of the best and most recognizable vocal instruments, cast as a villainess.

Ms. Kitt had an amazing voice. One I found to be amongst the most captivating ever. No matter what song I heard her sing I always heard the purrrrrr of Catwoman. I know it’s been done and redone but who will ever forget her rendition of Santa Baby?

I couldn’t do blues yesterday, so between that and the freezing rain-to-rain that’s come down, it’s Blues Day Friday…

[youtube]http://www.youtube.com/watch?v=fI0Ux3-JoBc[/youtube]

Some of you were actually busy blogging yesterday, so why not reward you with a Scramble.

Tom Blumer handicaps the race between Obama and the economy. Let me speak from experience; no matter what the economy does, CEBR and the presstitutes will declare the recession over at noon 1/20/2009, and not a minute earlier or later.

Oil Patch Plug found the Red Chinese beginning to unhitch their yuan from the dollar to make it an international currency. As someone who knows just a bit about the international currency market, all I can say is, “Just! Damn!”

Michelle Malkin discovered the next in line at the federal trough – the retail industry. Bonus item – GMAC, the finance arm of GM, is now a “bank holding company”, so whoever in my feed reader of bloat predicted that can now collect from his or her bookie while GM collects even more bailout money.

Jo Egelhoff found the ‘Rats and their allied groups outspent Pubbies and their allied groups 2-to-1. Yep; Campaign “Finance” Reform had its intended effects.

The Underground Conservative wonders how the Wisconsin Legislature could set up a system where it can’t stop an automatic pay raise at a time when the state is facing a multi-billion dollar shortfall in the next budget (and a several-hundred-million dollar shortfall in the current one). Short answer – it’s controlled by the bipartisan Party-In-Government. More on that later.

Rick Moran “thanks” the Minnesota DFL Secretary of State for conducting a master stroke in neutering the Minnesota Supreme Court and all-but-ensuring the theft of Seat #59 for the ‘Rats. I guess the only questions left are whether Shoebox was right when he said that there is essentially no difference between 59 and 60, and, if there is, which “Pubbie” will be peeled off by Barack Obama offering a plum administration job to deliver Seat #60.

With the new year just around the corner, it’s time to do some forward-looking navel gazing. No, I’m not going to shoot for the impossible, like hitting 200,000 readers (I haven’t had 100,000 since I put StatCounter up in April 2007), or getting celebrity guest-bloggers (I already have a very good cast that regularily bails me out, starting with Shoebox and going through Patrick, Fred, Aaron, Leslie, silent E and Big G, though if there are any celebrities that want to put up a post of two, I won’t turn you down). There are a couple of technical things that I really want to get done, though:

– Finally combine my feed reader, the blogs of those I follow on Twitter, the blogs of those I’m friends with on Facebook, and the Roll of Bloat into a synchronized mass of semi-organized chaos.
– Get the mobile version of this place WP2.7-compliant (i.e. allow one to reply to a particular comment)
– Figure out a way to allow people using the mobile version to vote on all the current polls without having to switch to the full-sized version.
– Get SOMETHING of my own up every day that I’m not on vacation. I’ve slacked way too much this year.

I’d also like to not have to rip both parties equally; of course, that depends mostly on whether the Pubbie half of the bipartisan Party-In-Government continues to control the GOP.

With that, I’ll throw it open to the rest of the crew and the 6 loyal readers of this place who actually pipe up. What do you want to see here in 2009?

I would be remiss if I didn’t thank Brad V and Ed Driscoll for the linkage. This year, I tried to comment on as many of the blogs listed above as I could and not leave it up to chance, WordPress’ auto-pingback feature, Townhall’s very-fluky auto-trackback feature (which resulted in some double-ping/trackbacks), the suddenly-fluky Google Blog Search or Technorati to deliver my Christmas wishes. I know there’s still people I missed, so to them, and to those of you who missed my annual posting of St. Luke’s account of Jesus’ birth, I’ll direct your attention here.

In those days Caesar Augustus issued a decree that a census should be taken of the entire Roman world. (This was the first census that took place while Quirinius was governor of Syria.) And everyone went to his own town to register.

So Joseph also went up from the town of Nazareth in Galilee to Judea, to Bethlehem, the town of David, because he belonged to the house and line of David. He went there to register with Mary, who was pledged to be married to him and was expecting a child. While they were there, the time came for the baby to be born, and she gave birth to her firstborn, a son. She wrapped him in cloths and placed him in a manger, because there was no room for them in the inn.

And there were shepherds living out in the fields nearby, keeping watch over their flocks at night. An angel of the Lord appeared to them, and the glory of the Lord shone around them, and they were terrified. But the angel said to them, "Do not be afraid. I bring you good news of great joy that will be for all the people. Today in the town of David a Savior has been born to you; he is Christ the Lord. This will be a sign to you: You will find a baby wrapped in cloths and lying in a manger."

Dad29 wonders why the EPA chose the time frame that included the demolition work associated with the Marquette Interchange to measure particle pollution in Milwaukee County. Simple; they wanted to put Milwaukee County in non-compliance. Bonus item from the Milwaukee Journal Sentinel story – because Milwaukee County is not in compliance, Racine and Waukesha Counties, which met the soon-to-be-implemented standards, is also in the “non-attainment zone” just because the EPA can declare that to be so.

Flip carries a telling exchange between Alaska Gov. Sarah Palin’s office and PETA. Which exhibit is this in the “Don’t bother to attempt to appease the Left becuase they’ll just lie about you anyway” series?

Fausta puts the serious hate on “It’s a Wonderful Lif…er, Bailout”. Life does imitate art, even if it’s 62 years late.

Fidothedog found that government waste in the midst of a deep recession isn’t limited to the US. That’s right, the EU spent â‚¬2,000 (that’s just under $2,800 at the current exchange rates) per employee on Christmas travel.

Randall Hoven has a plan to end this recession – “honest, responsible and predictable government budgeting.” Of course, putting the $57 trillion in unfunded Social Security/Medicare liabilities on the books is more likely to result in a revolution (which may not be such a bad idea).

Patrick McIlheran has the story of yet another set of businesses being run out of business by Red China and an unthinking federal government; small-toy manufacturers.

Gravelle hoists a cold one to a gang in Madison looking for some serious alcohol in their Reinheitsgebot-compliant beer. PROST!

Jason Pye brings good news for music pirates – RIAA will no longer be going after you with lawsuits. The bad news – if your ISP isn’t using anti-bit-torrent software, it likely will in the near future.

Donna Martinez has sad news for VHS holdouts – the last shipment of movies and shows on tape are out the door.

JackBoot found Treasury Department Form EZ-CASH. Given Hank Paulson and company are handing out my cash like it’s, well, my cash in a politician’s hands, I’m not so sure that it is a parody.

Mark Pribonic shows a benefit of a classical education, quoting Cicero on the folly of depending on the government for a bailout.

Jib gives a word of wisdom to the potheads that want legal pot. If you think that taxes on alcohol and tobacco are high, wait until the government gets its hands on the weed.

Dean finds the ‘Rats not so trusting of the voters when things don’t go their way. I’m shocked, SHOCKED, especially since…

Dan Riehl says the news isn’t all bad – the NYT may go under next year.

The Game lists the top ten media blunders (so far) of 2008. To quote Bachman Turner Overweigh…er, Overdrive, “You ain’t seen nothing yet.” Guess it’s time for song #2…
[youtube]http://www.youtube.com/watch?v=Jnd8ArBkKtA[/youtube]

Tom Blumer proves that The News Organization That Cannot Be Quoted™ does not practice what Bob Weeks wants, as they strip the ‘Rat from local stories they crib. Bonus item – it is against the latest publicly-available AP Stylebook guidance, though that may have changed since 2000.

Gorebal “Warming” Acolyte Stupidity Watch, Part 1 – lawhawk reports Seattle refuses to use salt on the roads because it might get into the salty Puget Sound.

Gorebal “Warming” Acolyte Stupidity Watch, Part 2 – Dad29 reports the Wisconsin DNR prohibits the dumping of snow into the local rivers that feed into Lake Michigan, so Milwaukee stores the snow under the Hoan Bridge until it melts into Lake Michigan. Oh yeah; between today and tomorrow, there’s another foot of snow to go on top of the nearly-3 feet we’ve picked up so far this month.

Why, Part 2 – Charles Johnson found a media outlet unwilling to swallow the whitewash whole. In the interest of full disclosure, the parent company of the Los Angeles Times was driven into bankruptcy partially because of actions by Illinois Gov. Rod Blagojevich (D).

Jeff Jarvis ran with a “throwaway” line from Los Angeles Times editor Russ Stanton stating that the LAT web revenue now exceeds its editorial payroll costs, and speculates that the LAT could switch to a web-only model. There’s a few problems with that:

– The editorial staff is a small part of the newsroom, even the local-only newsroom.
– The web server and technical support for a high-traffic website is not cheap.
– A major metropolitan daily cannot, despite claims to the contrary, focus solely on local and get away with it. Does anybody believe depending on, say, the Washington Post for DC news or the Sacramento Bee for Californai statehouse news is going to be cheaper than relying on The News Organization That Cannot Be Quoted™ (that would be AP), or Reuters?
– Fee-based content, as a rule, does not draw enough to cover the costs.

Maybe if they got rid of the editorial staff, which is the largest bit of aggravation, they could be profitable. I still doubt it, though.

As the bail out of The Big 3 has been discussed the past few weeks, much has been made about the unsustainable cost structures that they have. Depending upon the report you see, Detroit’s automakers pay somewhere around 60% more per labor hour than their domesticated foreign competitors. The UAW President, Ron Give-U-the-finger, will quickly contend that Detroit is only paying a dollar or so more than their competitors. The truth is that both statistics are accurate. How can that be?

When UAW Ron gives you a labor rate, he wants to talk only about the wages that are actually paid to workers that are assembling cars today. While that is a labor rate, it’s not the one that is used by accountants in determining costs. The labor that is 60% higher includes not only the costs of the people on the line today but also includes the costs of providing retirement benefits for folks who worked that line year and year ago.

Mark Steyn provides some information of how challenging the Big 3’s labor issue is in a column from Friday:

General Motors, like the other two geezers of the Old Three, is a vast retirement home with a small money-losing auto subsidiary. The UAW is AARP in an Edsel: It has three times as many retirees and widows as “workers” (I use the term loosely). GM has 96,000 employees but provides health benefits to a million people.

Holy upside down, Batman! It’s not hard to understand why the Big 3 have profitability issues when they are paying for 10 employees for every 1 they have working!

Now to be fair, GM, Ford and Chrysler each negotiated contracts that provided for this level of benefit. The UAW retirees are getting no more or less than what was agreed to in those contracts. My point here is not to argue what should be done about those agreements, just to let you know they are there.

In 1960 there were 5 workers for every individual who was receiving Social Security. Today, that ratio is around 3.3 to 1. Most analysis of the solvency of Social Security suggest that in the future we will see 2 workers supporting 1 retiree. Anyone noticing a trend?

Many people are upset with the Detroit Big 3. They are upset about the bail out. They are upset that the auto makers have had an unsustainable cost structure for years and have either moved slowly or done nothing about it.

It’s funny how many in Congress and the general public are quick to point to the Big 3 executives and brow beat them for not anticipating their problems and dealing with them. Yes, many people willing to point the finger at someone else but when it comes to dealing with a similar problem that they control or are impacted by…..say Social Security, they are perfectly willing to turn their head and look the other way.

If you think the bail out of Detroit’s retiree’s is a problem, you ain’t seen nothing yet!

December 22, 2008

As this story lays out, President elect Obama believes that the economic down draft is more serious than he first thought. As a result, his original goal of creating 2.5 million jobs appears inadequate. He now wants to target creating 3 million jobs.

Lest you think Obama’s is the “Gang who can’t shoot straight” and will charge in without a plan, put your worries to rest:

Obama representatives met this week with congressional staffers to discuss a plan estimated between $675 billion to $775 billion, the aide said, though earlier this week another aide said Obama may ask Congress to approve as much as $850 billion. Obama hasn’t specified a figure.

Those figures are all before Hank Paulson, or his successor, go to Congress to get the remainder of their $750 billion “mad money” pool.

Further, wanting to appear the adult in this new regime, Barack has told “the kids” not to have any parties with the tuition money:

Obama during the meeting told his advisers that spending proposals can’t include lawmakers’ pet spending projects; that funds should be directed toward already approved projects so jobs can be created quickly; and that government should help facilitate private ventures by removing bureaucratic red tape. (emphasis mine)

Does anyone really believe that the government can spend $850 billion without funding “pet projects?” Is anyone so naive to believe that, unless you’re one of those favored vassals like Hank Paulson, Fannie Mae, Freddie Mac or ACORN, for whom accountability is not a prerequisite, that the government could infuse $850 billion into projects with out increasing red tape, let alone, decrease red tape?

In the movie “Mr. Mom,” Jack (Michael Keaton) takes the role of “domestic engineer” after he is laid off and his wife, played by Teri Garr, lands a role as an advertising executive. Jack’s role as domestic engineer is not his dream role and part of the plot focuses on the challenges he has reconciling his new responsibilities with his personal definition of masculinity. At one point in the movie, Garr’s new boss picks her up at the family home. While waiting for Garr to get ready for a business trip they are taking, her boss makes small talk with Jack. As the boss is unable to relate to Jack as the domestic engineer, he asks about Jack’s home remodeling project that he has undertaken. He asks Jack whether he’ll be wiring 220 electrical service with the remodeling. Not knowing anything about wiring, but wanting to ensure that he portrays that he hasn’t lost an ounce of masculinity, Jack answers “220, 221. Whatever it takes!”

When it comes to job creation and printing of inflationary dollars to cause it, Barack Obama is using the same false Machismo that we saw from Jack in “Mr. Mom,” 2.5, 3 million, whatever you need. $675, $850 billion, $1 trillion, whatever it takes.

December 19, 2008

Shoebox asked the question. While I can’t officially condone gambling (at least if you use Hot Rod Blago as your bookie), I can officially condone an NRE poll. You can take up to 3, but I will wipe out any multiple answers that include “None of them”.

Which of the Big Three (if any) will be in essentially its pre-12/2008 form come 12/2018?